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UPI on credit cards likely  in  two  months

Experts believe that the phenomenal growth in UPI payments has been aided by the zero-MDR regime, a reason why merchants prefer payments through UPI instead of cards. (Photo: Mint)Premium
Experts believe that the phenomenal growth in UPI payments has been aided by the zero-MDR regime, a reason why merchants prefer payments through UPI instead of cards. (Photo: Mint)

  • In June, RBI allowed linking credit cards to the unified payments interface (UPI) system, a move experts had said would test the zero-merchant discount rate (MDR) benefit available to home-grown payments system

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Retail payments umbrella entity National Payments Corporation of India (NPCI) expects to operationalize the linking of Rupay credit cards to the unified payments interface (UPI) network in a couple of months, chief executive Dilip Asbe said on Friday.

“We are talking to BoB Cards, SBI Cards, Axis Bank, and Union Bank of India. We should be in a position to submit our proposal to the Reserve Bank of India (RBI) in ten days and once we get the approval, we should be able to start in two months," Asbe said at a Bank of Baroda (BoB) event.

In June, RBI allowed linking credit cards to the UPI system, a move that experts had said would test the zero merchant discount rate (MDR) benefit available to the homegrown payments system. Experts believe that the phenomenal growth in UPI payments has been aided by the zero-MDR regime, a reason why merchants prefer payments through UPI instead of cards. MDR is the charge paid by the merchant to the bank, card network and the point-of-sale provider for offline transactions and to the payment gateways for online purchases. On credit cards, MDR ranges between 2 and 3% of every transaction value. “We might to have take care of the smaller merchants and protect them from the MDR while the existing credit card servicing merchants can continue to pay," said Asbe.

Asked about the difference in pricing of UPI and credit cards and how both will be synched, RBI deputy governor T. Rabi Sankar had said in June “going to the pricing structure is jumping the gun" and RBI “will see how it will be priced".

Since January 2020, UPI transactions as well as those through indigenous card network Rupay do not attract MDR charges, a policy the payments industry has sought the government to roll back.

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